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May 2010 Newswire

Welcome to our monthly newswire...

Our aim is to keep you up to date with ideas and information that will help you gain the best possible advantages in working with us. This newswire will be sent regularly to help achieve this aim, and we hope you enjoy reading them.

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Key Dates

19 May 2010 - PAYE and NIC due for the month ended 5th May 2010. Final submission date for employers' year end returns (forms P35 and P14) for the year ended 5th April 2010. Submit Construction Industry Scheme return for the month ended 5th May 2010.

31 May 2010 - Employers to provide employees with forms P60 (year end summaries) for the year ended 5th April 2010.

19 June 2010 - PAYE and NIC due for the month ended 5th June 2010. Submit Construction Industry Scheme return for the month ended 5th June 2010.

A Working Holiday

Richard Green-Wilkinson, Tax Director at CW Fellowes Limited shares his  thoughts on a recent visit to Sierra Leone.

"I have been a trustee of the St George Foundation, which rescues street children in Sierra Leone, for four years.  I decided to return to the country four years after my first visit.  I had one or two jobs to do.

Surprisingly little had changed - a sunny destination with some beautiful beaches, but this is not a holiday resort. This is one of the poorest countries in the world, savaged by 11 years of civil war, which finally ended in 2003.

Crossing the bay from the airport to Freetown was the same old rusty, smelly ferry.  When you reach Freetown you are hit by the noise, the bustle and the poverty. Mud and corrugated iron housing amongst some brick built buildings, no modern high rise buildings or Western economy influences here.

At just 10 degrees north of the equator it is very hot and very humid.

In the five years it has been running, St George Foundation (SGF) has rescued some 650 children. It is seen as one of the most successful charities in Sierra Leone. When a local children’s charity was closed down recently, the President insisted the children were taken in by SGF, rather than UNICEF.

99% of all funds raised in the UK are sent to this charity in Sierra Leone, and my job was to check that the money is received and properly recorded.

During the middle of the day I spent a gruelling five hours checking the records and was amazed to find that they had a receipt for every item of cash drawn.

At 6,000 Leones to the pound a transfer of £1,000 would mean that the charity would have to collect 6,000 grubby 1,000 Leone notes.  Quite a challenge with the security problems in Freetown.

I was accompanied by my wife,  Anne, we are both keen to help the charity to raise funds in Sierra Leone and to help grow their own food, so while there we checked on a rice growing project.  The rice fields are north of Makeni, so we had a three hour drive. Fortunately about the only good bit of road is between Freetown and Makeni.  Elsewhere the roads are just appalling!

It seems we timed the sowing better this year as the harvest looked to be better than last year.

We explained to the farmers that they would get a better yield if they planted the rice seed instead of scattering. They  were not convinced but agreed to plant our land and scatter on their own – and see which does better. We are hoping to plant up 250 acres for the coming season.

In a further attempt at encouraging the charity to raise funds in Sierra Leone, we have been buying up cheap second hand 4x4's in the UK and shipping them out. A nice idea if we can hire them out at $1,000 per week. What I hadn’t realised was quite how bad the roads are.  Still, at least we can write off the cost in the accounts in the year of purchase!

The other problem with the 4x4's is that as soon as the ship docks in Freetown everything moveable gets stripped out and taken. One vehicle had a built in CD player so the whole dashboard was taken apart.

It was an interesting experience when, on the last day, we decided to take the children to the beach. 60 of them and 7 adults in 3 4x4's is quite a sight. No health and safety regulations here. It would have been fine if 3 of the children hadn’t been car sick!

Part of our role in Sierra Leone is to check on the children that have gone back into the community. After about a year at the Centre, a search is made for family, perhaps distant relations, with a view to reinstating them, but continuing to pay their school fees.  All schools are fee paying.

While we were there one family was visited where the father had seen his own parents killed by the rebels in his house, and they had then cut off his hands. He managed to escape with his wife and children, sadly his wife later died. We had subsequently picked up one of the children on the streets.

The father was well educated, but could not get a job without any hands. He and his five children live in a corrugated iron shack.  It is pitiful to see such poverty.

We spent a lot of time during our visit exploring the setting up of a midwifery training school.

Although the main aim of SGF is to rescue street children, the problem is that there is a steady trickle of more children onto the streets. So the challenge is how to cut this down. One way of tackling this, which SGF is undertaking, is to set up community organisations to spot family problems and solve the problems before they get serious.

Another problem is the very high maternity mortality rate. At one in eight this is one of the worst in the world. Without a mother to care for them, children are likely to find their way onto the streets.

We visited a possible hospital site and talked to the site owners about the additional accommodation that would be needed. No need for lengthy planning permission requirements here. We had a meeting with the President’s wife, who is very keen on the project and agreed to be the Patron.

Although we had a busy and productive week, we left with the feeling that so much needs to be done here. All we can do is keep providing the funding and ideas, with a view to helping as many children and give them a decent life and hope for the future."

Richard Green-Wilkinson
April 2010

Penalty Guidance on Late Payment of PAYE

HMRC have been warning employers for some time that they may have to pay a penalty if they do not pay their PAYE deductions on time. They have now issued more detailed guidance on the way in which the penalties will work. The penalties will apply to PAYE deductions due for a period starting on or after 6 April 2010 include PAYE, Student Loan deductions, Construction Industry Scheme payments, Class 1 NICs, annual payments of employers' Class 1A NICs and annual PAYE Settlement Agreements payments.

Deductions of PAYE, NICs, Student Loan deductions and Construction Industry Scheme payments are generally due by 19 of each month (or 22 if paid by electronic means and cleared into HMRC’s bank account). Small employers are able to pay quarterly.

HMRC are advising employers to let HMRC know if they are likely to have difficulty making a payment on time, so that arrangements can be made and penalties can be avoided. Their guidance states that where employers enter into ‘time to pay’ arrangements, before the liability becomes due, no penalty will be charged.

Penalties for late payment start at 1% increasing to 4% depending on the number of late payments in the year. Extra penalties will be added where liabilities are outstanding for a further six and then 12 months.

Internet link: HMRC guidance on late payment

National Minimum Wage Rates

From October 2010, National Minimum Wage rates will increase from

  • £5.80 to £5.93 an hour for workers aged 21 and over
  • £4.83 to £4.92 an hour for workers aged 18 to 20
  • £3.57 to £3.64 an hour for workers aged 16 to 17.

The government has extended the adult minimum wage rate to 21 (previously 22) year-olds from October 2010 and, for the first time, an apprentice minimum wage rate has been set at £2.50 an hour.

The Low Pay Commission Chairman David Norgrove said:

"We are pleased that the government has again accepted the Commission’s recommendations. The introduction of an apprentice rate marks an important extension to minimum wage protection across the UK."

Penalties for non compliance

From April 2009 HMRC are able to charge penalties to those employers found to be in breach of the NMW rules.

Automatic penalties are levied on employers where HMRC officers find NMW arrears. The penalties range from £100 to £5,000 with 50% prompt payment discounts for employers who settle within 14 days of notification.

The penalty is payable in addition to arrears owed to the workers.

In serious cases of non compliance the employer may be tried in a Crown Court and in those cases the fines are unlimited.

If you have any queries on the NMW please do get in touch.

Internet links:  NMW rates and NMW penalties

Furnished Holiday Letting Reprieve

Getting the Finance Bill 2010 passed between when it was published on 1 April 2010 and the dissolution of Parliament on 12 April was always set to be a heavy load in spite of the fact that there were only 73 clauses and supporting schedules.

That load was lightened as certain of the more unpopular proposals were dropped. The abandoned additional increase on cider duty compared to other alcoholic drinks may have grabbed the headlines but another tax related proposal may be of wider interest.

The favourable tax regime for Furnished Holiday Lettings accommodation was due to be repealed from 6 April 2010. This proposal was dropped from the Finance Bill but what happens next depends on the outcome of the General Election. The Financial Secretary to the Treasury has pledged that this and the other withdrawn clauses will be re-introduced in a second Finance Bill should his party be returned to government.

It does mean for the present there is uncertainty as to the tax treatment of this type of property business as 2010/11 gets under way. We will keep you informed of any further developments.

Internet link: Accountingweb article

HMRC Offer Advice on Fraud Emails

HMRC are reminding taxpayers to be vigilant as there have been several reports of scam emails.

Where taxpayers believe they may have been the victim of an email scam they should report the matter to their bank/card issuer as soon as possible. HMRC have previously advised that that those providing their details have had their accounts emptied and credit cards used to their limit. Victims are also at risk of having their personal details sold on to organised criminal gangs. 

This is not the only area where HMRC are aware of a problem. Companies are being targeted by email for a National Insurance service. The email offers the service of applying for a rebate of National Insurance on the customer’s behalf, usually for a fee. These companies are not affiliated with HMRC in any way.

HMRC’s further advice is to:

Internet link:  HMRC current security messages

P11D Deadline Looming

The forms P11D, and where appropriate P9D, which report employees and directors benefits and expenses for the year ended 5 April 2010, are due for submission to HMRC by 6 July 2010. The process of gathering the necessary information can take some time, so it is important that this process is not left to the last minute.

Employees pay tax on benefits provided as shown on the P11D, either via a PAYE coding notice adjustment or through the self assessment system. In addition, the employer has to pay Class 1A National Insurance Contributions at 12.8% on the provision of most benefits. The calculation of this liability is detailed on the P11D(b) form.

If you would like any help with the completion of forms P11D or the calculation of the Class 1A liability please get in touch.

Internet link: HMRC P11D guidance

VAT and Royal Mail Postage

Some types of postal services offered by the Royal Mail will be subject to VAT from 31 January 2011.

According to the latest information issued by HMRC

“In broad terms, the proposed changes will mean that any service which is individually negotiated or not subject to any price and regulatory control will become liable to VAT at the standard rate. This includes, but is not limited to:

  • all individually negotiated services
  • Parcelforce services
  • door-to-door (unaddressed mail)
  • mailroom services”.

The change follows European Court of Justice Decision known as TNT Post UK Ltd which ruled that the UK has applied the exemption for postal services more widely than was permitted under the special rules which applied to Post Office Mail. HMRC will introduce new legislation to amend the rules from 31 January 2011.

HMRC are currently considering claims submitted by businesses following the TNT case. As claims are subject to strict time limits it is important to act quickly. It should be noted that first, second and metered mail and standard parcel delivery are and will continue to be exempt. A claim cannot be made in respect of these services.

For more information please do get in touch.

Internet links: VAT Brief and VAT on postage

Online Submission of Employers Forms

The employer’s annual returns P35 and P14 (P60) are due for submission to HMRC by 19 May 2010. Broadly all employers must submit their forms online this year.  Previously those employers with less than 50 employees could file paper forms.

The final date for payment of PAYE, National Insurance Contributions, Construction Industry Scheme deductions and Student Loan deductions was 19 April 2010 (22 April 2010 for cleared receipt of electronic payments into HMRC’s bank account).

The deadline for providing employees with their forms P60 is 31 May 2010 (Bank Holiday Monday).  Employees must be provided with a paper form P60 this year. HMRC have confirmed that for 2010/11 electronic forms will be acceptable.

Internet links: HMRC employer guidance and  IPP press release

 

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